Casualties of Funds Crunch

All three forces will have to delay modernisation plans and cut back on training as they begin to feel the pinch

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AVIROOK SEN

October 15, 1996

ISSUE DATE: October 15, 1996

UPDATED: October 15, 1996 00:00 IST

DURING A DECADE THAT HAS seen China's defence industry blossom and Pakistan emerge as one of the world's major arms importers, India's outlay for defence has remained stagnant in real terms. And there are indications that this is not a passing phase: it is the shape of things to come. The attrition has already taken its toll on all three forces- even maintaining a credible conventional armed force is becoming increasingly difficult.

This year's outlay of Rs 27,798.57 crore hasn't helped reverse the trend. At 2.26 per cent of the gross domestic product (GDP), the present defence budget is the tightest ever since the 1962 war with China. Coupled with this is the fact that the forces are still paying for the arms race with Pakistan which gained momentum in the '80s. India still owes Russia an estimated Rs 30,000 crore for armaments purchased in the early and mid-'80s. And the services are feeling the pinch.

"It takes 100 years to build a navy, it takes continuous planning and phased replacement," said outgoing chief of naval staff Admiral V.S.

Shekhawat recently. The navy is clearly the worst hit by the funds crunch. It faces a massive reduction in force levels over the next few years, and defence analysts feel that the implications of this are far greater than is being generally acknowledged. China is showing an increasing interest in the Indian Ocean; besides, Indian maritime interests are no longer purely military: 97 per cent (by volume) of India's foreign trade is done via the sea. Safe seas will therefore mean safe trade.

Indian naval missions were formulated around aircraft carriers. But now it faces the prospect of losing the carrier arm altogether. Of the two aircraft carriers that the navy possesses, INS Vikrant is being retired this year, while INS Virat will last another six years. The Government is negotiating a deal with Russia for the purchase of the Admiral Gorshkov, an aircraft carrier the Russians have no use for. But even the Gorshkov has a price-tag of about Rs 1,800 crore.

Aircraft carriers are only one of the navy's many problems. With hardly Rs 400 crore to spare for the year, the navy can barely make down payments on Rs 3,000 crore of equipment against a requirement of Rs 15,000 crore. So its fleet of 40 principal com-batants-fighting vessels that are over 2,000 tonnes-will be down to 28 by the year 2000.

The effects of the cuts are all too evident at the shipyards. The submarine side of the Mazagon dock shipyard, the only facility for the construction of submarines in India, has been idle for the past two years for lack of orders from the navy. And its hull fabrication unit utilises only 35 per cent of the capacity.

In contrast, Pakistan's naval strength has kept growing. It has placed orders for three Agosta-90 submarines from France, acquired six Type-21 frigates from the UK, and is all set to ac- quire three PC-3 Orion Maritime Patrol aircraft, which are armed with long-range anti-ship missiles. "Pakistan has become the second-largest maritime strike force in the Indian Ocean after Australia," says naval analyst Rahul Roy Chaudhury. The Ministry of Defence calls it "a deteriorating naval equation". Eventually, India may be forced to switch to a defensive, limited sea control policy in the Indian Ocean. As for the army, its problems are manifold. Nearly 1.3 million strong, it is

the flabbiest of the three services: almost 50 per cent of the money allotted to it goes to paying salaries and pensions. And once the Fifth Pay Commission's recommendations come into force (a hike of 15-20 per cent, possibly with retrospective effect from January 1, 1996, sources say), money will almost certainly have to be diverted from other heads in order to pay the bill.

This year's allocation of Rs 14,590 crore for the army means that a number of modernisation projects that have been undertaken will be set back even further. The army had projected an expenditure of Rs 3,496 crore for modernisation and re-equipment. The budget finally gave them Rs 2,358 crore; what will suffer are the induction of the Prithvi missile system; the upgradation of 400 T-72 main battle tanks; and even the plans to introduce the 155 mm self-propelled gun, that would greatly increase the army's strike capability. For, what will be left of the capital outlay after meeting past contractual obligations is a measly Rs 332.58 crore.

As if all these weren't bad enough, money has also been wasted. To cite two examples: a 10-year delay in procuring simulators for the tank crew has cost the exchequer Rs 124 crore a year; and imported ammunition worth Rs 31 crore lying in ordnance depots could not be salvaged before their expiry because the required components were not available.

Just as in the other two services, there will be little left over from the IAF kitty to go in for any meaningful modernisation programme. The amount set aside for aircraft and aero-engine acquisitions this year is Rs 2,665 crore. While this represents an increase of Rs 350 crore over the previous year, most of this money will be used in repaying debts incurred for deals closed earlier-like the MiG-21 up-gradation programme.

Ad hoc planning has only compounded the IAF's woes. For instance, while the previous government had made a Rs 500 crore, hard-currency down-payment for the acquisition of 30 Su-30 fighters from Russia six months ago, the UF Government has deferred a decision on the remainder of the payment-Rs 1,500 crore-citing a cash crunch. Keeping the deal on hold has already cost the country Rs 25 crore. And a 12-year delay in the acquisition of the Advanced Jet Trainer (AJT) has already set the IAF back by an average of 24 fighters a year-the kind of price the services pay for procrastination.

Each IAF pilot does about 100 hours of fighter-plane flying a year, compared to 160 or 180 hours by his counterparts in western countries. Now IAF pilots' flying time is likely to be reduced further, with the fuel and lubricants bill cut by about a third. This, in turn, increases the chance of accidents, at a time when the cost of replacing a fighter-aircraft is over Rs 60 crore.

SOME defence analysts say it would be wise to indigenise, for it is almost impossible to keep pace with exponentially increasing prices for imported arms. An option for the IAF, for instance, is to reopen the indigenous MiG-21 manufacturing line. But in most cases-whether they are transport vehicles or battle tanks-the cost of production in ordnance factories is far higher than in the marketplace. Nonetheless, the Government is keen to indigenise 70 per cent of defence equipment by the year 2005. As A.P.J. Abdul Kalam, scientific adviser to the defence minister says, "In view of the international embargoes and control regimes, it is critical that we become self-reliant."

This, however, would once again be contingent on the allocation which defence gets in future. The Institute of Defence Studies and Analyses, New Delhi, has recommended that in order to maintain a credible conventional army, an outlay of 3 per cent of the GDP is necessary. And anything less than 2.5 per cent would require the deployment of nuclear capability.

Policymakers are aware that going nuclear has enormous political costs, while analysts warn that a nuclear capability can never replace a conventional one. Yet, to preserve such a capability in view of the economic realities, decision making has to be more streamlined and time-bound. Manpower may have to be cut as well-large chunks of the budget go towards pay and allowances-but a phased modernisation programme has to proceed alongside. Defence production could be opened up to the private sector in order to increase efficiency and even generate exports. Most of all, a clear national security policy has to be formulated, defining the country's goals and the role India should play in the region. One lesson from the experience of the past 10 years is that yearly budgets for defence lead to myopic planning. Unless that is changed in favour of longer-term allocations, and there are fiscal guarantees instead of merely assurances in the finance minister's budget speech, every budget is going to bring the services bad news.

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